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GM Profits At $3.2 Billion For The First Quarter

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On: Fri, May 6, 2011 at 6:05PM | By: Tim Healey


GM Profits At $3.2 Billion For The First Quarter

General Motors has posted a profit of $3.2 billion in the first quarter of 2011. That marks quite the turnaround for a company that was helped into a guided bankruptcy by the federal government in 2009.

The $3.2 billion profit marks the fifth straight quarter that the automaker has been profitable. Revenue was up 15 percent, to $36.2 billion.

It was good earnings in North America—which more than doubled to $2.9 billion—that helped GM achieve its first-quarter numbers.

GM expects that profits will improve throughout the year, due to cost-cutting measures and better pricing. The company believes that will offset the rising costs of commodities and a market shift away from trucks and towards cars, which are less profitable.

During the run-up to bankruptcy and the bankruptcy itself, GM took a lot of heat from critics who would've rather seen the company fail, and many felt that the company wouldn't be able to survive post bankruptcy even with government help.

But a combination of slow economic recovery and a strong product mix have helped GM move out of the doldrums. GM is beginning to build cars that can steal buyers away from competition, both foreign and domestic, and that's helping the automaker post these numbers.

In particular, GM is scoring well with small cars and crossover SUVs, which have helped the automaker survive the shift away from trucks and large SUVs, a shift brought on by rising gas prices. The Chevrolet Cruze has been much more well-received than its predecessor, the Cobalt, and the Chevrolet Equinox and GMC Terrain SUVs have done well. A revived Camaro muscle car has also helped.

So, too, has a revival at Buick, with the new Regal and the LaCrosse (redesigned as a 2010 model) helping to revitalize that brand's stodgy image.

Like all automakers, GM still faces obstacles in 2011. While it appears that the disaster in Japan might not hurt GM too much, rising gas prices and uncertain economic progress could stall the automaker's growth. Despite the recent success, GM, like all automakers, must acknowledge that reality.

The road ahead for GM is still uncertain, but the picture is rosier than it was just a year or two ago.

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Press Release

GM Reports Net Income of $3.2 Billion

2011-05-05

Net income of $1.77 per share including a net gain from special items of $0.82 per share
EBIT of $3.5 billion and EBIT-adjusted of $2.0 billion
GM Europe achieves breakeven results on an EBIT-adjusted basis

DETROIT – General Motors Company (NYSE: GM) today announced first quarter net income attributable to common stockholders of $3.2 billion, or $1.77 per fully-diluted share, marking the company’s fifth consecutive profitable quarter. Revenue increased $4.7billion to $36.2billion, compared with the first quarter of 2010.

“We are on plan,” said Dan Akerson, chairman and CEO. “GM has delivered five consecutive profitable quarters, thanks to strong customer demand for our new fuel-efficient vehicles and a competitive cost structure that allows us to leverage our strong brands around the world and focus on driving profitable automotive growth.”

Net income attributable to common stockholders includes gains of $1.6 billion and $0.3 billion respectively related to the sales of the company’s ownership interest in Delphi Automotive LLP and AllyFinancialInc. preferred stock. It also includes a $0.4billion goodwill impairment charge at GM Europe (GME) resulting from a change in accounting standards and charges totaling $0.1billion at GMInternational Operations (GMIO) related to revised tax regulations affecting the company’s India joint venture. Combined, these special items increased net income attributable to common stockholders by $1.5 billion or $0.82 per fully-diluted share.

Earnings before interest and tax (EBIT) were $3.5 billion. EBIT adjusted to exclude special items was $2.0 billion compared with $1.7 billion in the first quarter of 2010.

GM Results Overview (in billions except for per share amounts)

Q1 2010Q1 2011
Revenue$31.5$36.2
Net income attributable to common stockholders$0.9$3.2
Earnings per share (EPS) diluted$0.55$1.77
EBIT$1.8$3.5
Less special items$0.1$1.5
EBIT – adjusted$1.7$2.0
Impact of special items on EPS diluted$0.08$0.82
Automotive net cash flow from operating activities$1.9$(0.6)*
Automotive free cash flow$1.0$(1.9)*

* Includes $2.5 billion negative impact related to wholesale advance financing agreement termination

GM North America (GMNA) reported EBIT of $2.9 billion compared with $1.2 billion in the first quarter of 2010. On an EBIT-adjusted basis, GMNA increased its earnings by $0.1 billion to $1.3billion compared with the first quarter of 2010. The company expects GMNA’s quarterly EBIT-adjusted results to improve on average for the remainder of the year compared with the first quarter as better pricing and improved fixed cost should more than offset commodity cost increases and unfavorable mix.

GME reported EBIT of $(0.4) billion. GME’s results improved by $0.6 billion on an EBIT-adjusted basis compared with the first quarter of 2010 and it achieved a significant milestone by delivering breakeven results on that basis. Based on current plans, GME is targeting to achieve breakeven results on an EBIT-adjusted basis before restructuring for the entire year.

GMIO reported EBIT of $0.5 billion compared with $0.9 billion in the first quarter of 2010. On an EBIT-adjusted basis, GMIO earned $0.6 billion in the first quarter, a decline of $0.3 billion compared with the first quarter of 2010.

GM South America (GMSA) reported EBIT of $0.1billion, down $0.2 billion from the first quarter of 2010. There were no adjustments in either period.

GM expects that full-year 2011 EBIT-adjusted results will show solid improvement over 2010. GM continues to expect no material impact on full-year results from the Japan crisis.

For the quarter, automotive cash flow from operating activities was $(0.6) billion and automotive free cash flow was $(1.9) billion. Both figures include the $2.5 billion cash impact of GM’s decision, announced in October 2010, to end a wholesale advance agreement with AllyFinancial.

GM ended the quarter with very strong total liquidity of $36.5 billion. Automotive cash and marketable securities, including Canadian Health Care Trust restricted cash, was $30.6 billion compared with $27.6 billion at the end of the fourth quarter of 2010.

“GM has great potential to deliver profitable growth around the world as the recovery continues,” said Dan Ammann, senior vice president and CFO. “While we’re encouraged, we keenly recognize we have more opportunities to leverage ourscale, improve spending and investment efficiencies, and optimize our strong balancesheet.”




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